Commerce Accountancy

Accounting Principles and Practices

2,324 Questions

Accounting principles and practices involve the preparation of trial balances, ledgers, and bank reconciliation statements. This area tests your knowledge of fundamental accounting concepts and routine business transactions. It is a core section in commerce exams and various competitive tests.

Ledger accountsTrial balance preparationBank reconciliation statementAccounting conceptsPrimary books of accounts

Accounting Principles and Practices Questions

Multiple choice

The data/information provided by a credit information company to member banks is called

  1. credit information report

  2. credit report

  3. confidential report

  4. confidential credit report (CCR)
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The Credit Information Bureau of India Ltd. (CIBIL) consolidates the information on individual borrowers' credit history, sourced from different member credit institutions such as banks, credit card companies and NBFCs, into a single report called the CIR.

Multiple choice

_______ copies of balance sheet and profit and loss account, prepared by banks, are to be submitted to RBI within ______ months. Banking companies are also to submit three copies to

  1. 2 copies, 2 months, SEBI

  2. 3 copies, 3 months, SEBI

  3. 2 copies, 3 months, Registrar of Companies

  4. 3 copies, 4 months, Registrar of Companies
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Two copies of balance sheet and profit and loss account, prepared by banks, are to be submitted to RBI within three months. Banking companies are also to submit three copies to Company Law Board. Every miscellaneous non-banking company shall deliver to the Reserve Bank, unless it has done so already, an audited balance sheet as on the last date of each financial year and an audited profit and loss account in respect of that year as passed by the company in general meeting together with a copy of the report of the Board of Directors laid before the company in such meeting in terms of Section 217(1) of the Companies Act, 1956 (1 of 1956) within fifteen days of such meeting.

Multiple choice

Which of the following statements is not correct with regard to publication of accounts and balance sheet of a bank?

  1. Publication has to be in a newspaper in circulation at the place where the principal office of the banking company is located.

  2. Publication should be within 6 months from end of the period to which the account and balance sheet relate.

  3. Publication can only be in a newspaper that is published every day.

  4. Publication is undertaken u/s 31 of BR Act.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Publication only in a newspaper that is published every day is not true with regards to publication of accounts and balance sheet of a bank. 

Multiple choice

Banks are required to make deduction of tax at source but before that, they should have/obtain

  1. permanent account number (PAN)

  2. tax deduction account number (TAN)

  3. tax identification number (TIN)

  4. All of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Tax Deduction Account Number or Tax Collection Account Number is a 10-digit alphanumeric number issued by the Income Tax Department (we will refer to it as TAN). TAN is to be obtained by all persons who are responsible for deducting tax at source (TDS) or who are required to collect tax at source.

Multiple choice

A transaction that results in change in asset or liability position outside India of a person resident in India or position in India of a person resident abroad is called

  1. current account transaction

  2. balance of payment

  3. capital account transaction

  4. trade balance
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Capital account transaction is defined as a transaction which alters the assets or liabilities, including contingent liabilities, outside India of persons resident in India. In other words, it includes those transactions which are undertaken by a resident of India such that his/her assets or liabilities outside India are altered (either increased or decreased).

Multiple choice

Anticipated losses are recorded in the books of accounts as per

  1. Matching of cost & revenue

  2. Accrual concept

  3. Convention of conservatism

  4. Going concern concept
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The Convention of Conservatism (or Prudence Concept) in accounting requires anticipating potential losses but not anticipating gains. This means creating provisions for doubtful debts, depreciating assets quickly, and valuing inventory at lower of cost or market. The matching concept relates to expense recognition, accrual to timing, and going concern assumes business continuity.

Multiple choice

Which accounting concept defines as: 'The business stands apart from other organizations as an economic unit. It is necessary to record the business's transactions to distinguish them from the owner's personal transactions'?

  1. Money Measurement Concept

  2. Business Entity Concept

  3. Accrual Concept

  4. Periodicity Concept
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Business Entity Concept defines as 'The business stands apart from other organizations as an economic unit. It is necessary to record the business's transactions to distinguish them from the owner's personal transactions.'